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So the shareholders in that company got screwed, along with the whistle-blower getting part of that settlement? Doesn't that create bad incentive for whistlebl

by kiba 10y ago

So the shareholders in that company got screwed, along with the whistle-blower getting part of that settlement? Doesn't that create bad incentive for whistleblowers not to do anything until it's too late?

cloudjacker 10y ago
> So the shareholders in that company got screwed But did they? The company already had rainy day money set aside, so it was adequately priced in to the share price by now. Did the executive wait till after the regulatory filing came out with the misstatement just so they could rat to the SEC? Maybe, there's no consequence in doing things that way. In other more detailed cases, an employee tries to raise an issue internally and gets ignored or stonewalled by higher ups, and then eventually gets to the SEC. These things take time, so it would be equally as difficult to define 'bad incentive, too late', let alone being legally inconsequential from the government's perspective to the whistleblower
NTDF9 10y ago
The incentive is clear. Whistleblow and you get a reward. The whistleblowers are humans who can't really wait until later and later. It risks being found out or losing the window of whistleblowing. Also, most people are not this analytical. If they have the balls to whistleblow, they will, usually right away (after some due diligence)
- bagacrap 10y ago
  It seems like the incentive is to become an accountant and seek employment at the shadiest big company you can find in hopes of hitting a whistleblower jackpot.
  - NTDF9 10y ago
    That's a shitty bet to take in life, considering that the likelihood is as good as winning the lottery. At least the lottery ticket costs just $10 and not a few years of life.
S_Daedalus 10y ago
Are you really claiming that a $22M loss is a "screwing" for Monsanto?
- Alex63 10y ago
  Monsanto's punishment was an $80M settlement. The $22M was just the reward to the whistleblower.
  - gingerrr 10y ago
    Monsanto posted a gross profit in 2015 of $8 billion [1]. I doubt losing 1% of their earnings for a single year qualifies as being "screwed". -- [1]: http://www.monsanto.com/investors/documents/2015/2015.10.06_mon_q4f15_earnings.pdf http://www.monsanto.com/investors/documents/2015/2015.10.06_... - "Gross Profits: $8,182 M" edit: accidentally a word
    - staticvar 10y ago
      God. Put it in those terms and it feels like the punishment for corporate tax fraud is a parking ticket.
      - S_Daedalus 10y ago
        Even worse, it's just written off as a cost of doing business.
    - rtpg 10y ago
      It's for accounting improprieties, not a drug hustle. The fine is proportional to the crime. Even if we charged $800 million for this, would we charge $800 million for them not having a handicapped parking space at one of their offices? Comparing to overall profits is counterproductive and dishonest. The punishment should fit the crime.
      - TheCoelacanth 10y ago
danudey 10y ago
Only if you're the only person who knows. If it's more well known than that it's a race to be the first person to whistle blow.
deleted 10y ago
[deleted]
compiler-guy 10y ago
The shareholders, by the act of buying and holding the shares, expose themselves to all risks of owning a piece of the company. That the company may engage in accounting fraud is one of those risks. The shareholders also benefited from the overstated earnings.
OliverJones 10y ago
In the 1970s the newly established EPA offered bounties to environmental whistleblowers, who dropped a dime on polluters and helped it make the case against them. It was an expedient way of detecting violators and enforcing the law, because it takes both knowledge of facts and expertise in science to do that enforcement. Engaging with whistleblowers helped the new EPA overcome their understaffing and inexperience. For example, fact: "that pipe coming out of that factory puts polychlorinated biphenyls into the Housatonic River at night." science: PCBs concentrate in fish. They mess up the immune systems of mammals, including people, who catch and eat those fish. The proceeds of these bounties early in the life of the Clean Water Act founded some long-lasting watchdog orgs, such as the Hudson Riverkeepers. It is good for the government to create incentives for people with facts and expertise to help them prosecute financial crimes, for the same reasons. Hopefully some of these big bounties will go to establishing long-lived watchdog organizations to keep would-be fraudsters honest.

by kiba 10y ago

cloudjacker 10y ago

> So the shareholders in that company got screwed But did they? The company already had rainy day money set aside, so it was adequately priced in to the share price by now. Did the executive wait till after the regulatory filing came out with the misstatement just so they could rat to the SEC? Maybe, there's no consequence in doing things that way. In other more detailed cases, an employee tries to raise an issue internally and gets ignored or stonewalled by higher ups, and then eventually gets to the SEC. These things take time, so it would be equally as difficult to define 'bad incentive, too late', let alone being legally inconsequential from the government's perspective to the whistleblower

NTDF9 10y ago

The incentive is clear. Whistleblow and you get a reward. The whistleblowers are humans who can't really wait until later and later. It risks being found out or losing the window of whistleblowing. Also, most people are not this analytical. If they have the balls to whistleblow, they will, usually right away (after some due diligence)

bagacrap 10y ago
It seems like the incentive is to become an accountant and seek employment at the shadiest big company you can find in hopes of hitting a whistleblower jackpot.
- NTDF9 10y ago
  That's a shitty bet to take in life, considering that the likelihood is as good as winning the lottery. At least the lottery ticket costs just $10 and not a few years of life.

S_Daedalus 10y ago

Are you really claiming that a $22M loss is a "screwing" for Monsanto?

Alex63 10y ago
Monsanto's punishment was an $80M settlement. The $22M was just the reward to the whistleblower.
- gingerrr 10y ago
  Monsanto posted a gross profit in 2015 of $8 billion [1]. I doubt losing 1% of their earnings for a single year qualifies as being "screwed". -- [1]: http://www.monsanto.com/investors/documents/2015/2015.10.06_mon_q4f15_earnings.pdf http://www.monsanto.com/investors/documents/2015/2015.10.06_... - "Gross Profits: $8,182 M" edit: accidentally a word
  - staticvar 10y ago
    God. Put it in those terms and it feels like the punishment for corporate tax fraud is a parking ticket.
    - S_Daedalus 10y ago
      Even worse, it's just written off as a cost of doing business.
  - rtpg 10y ago
    It's for accounting improprieties, not a drug hustle. The fine is proportional to the crime. Even if we charged $800 million for this, would we charge $800 million for them not having a handicapped parking space at one of their offices? Comparing to overall profits is counterproductive and dishonest. The punishment should fit the crime.
    - TheCoelacanth 10y ago

danudey 10y ago

Only if you're the only person who knows. If it's more well known than that it's a race to be the first person to whistle blow.

deleted 10y ago

[deleted]

compiler-guy 10y ago

The shareholders, by the act of buying and holding the shares, expose themselves to all risks of owning a piece of the company. That the company may engage in accounting fraud is one of those risks. The shareholders also benefited from the overstated earnings.

OliverJones 10y ago

In the 1970s the newly established EPA offered bounties to environmental whistleblowers, who dropped a dime on polluters and helped it make the case against them. It was an expedient way of detecting violators and enforcing the law, because it takes both knowledge of facts and expertise in science to do that enforcement. Engaging with whistleblowers helped the new EPA overcome their understaffing and inexperience. For example, fact: "that pipe coming out of that factory puts polychlorinated biphenyls into the Housatonic River at night." science: PCBs concentrate in fish. They mess up the immune systems of mammals, including people, who catch and eat those fish. The proceeds of these bounties early in the life of the Clean Water Act founded some long-lasting watchdog orgs, such as the Hudson Riverkeepers. It is good for the government to create incentives for people with facts and expertise to help them prosecute financial crimes, for the same reasons. Hopefully some of these big bounties will go to establishing long-lived watchdog organizations to keep would-be fraudsters honest.